Recently released Audit Office reports covering three of the previous five years reveal serious and recurring issues that cast doubt over the reliability and accuracy of the government’s financial reporting.
Poor record keeping, not providing evidence, and not being given access to government records were major deficiencies highlighted by the Audit Office in its reports for the government’s financial statements for the 2014-2015, 2015-2016, and 2016-2017 fiscal years.
Due to the issues highlighted, the Audit Office was unable to fully endorse the government’s fiscal position and financial performance for each of the years audited.
In each year, officials from the Audit Office were prevented from accessing tax records to verify the government’s stated figures for taxation revenue.
In 2017, government reported $118.9 million in tax revenue and $11.1 million in tax receivables. Combined they account for over 58 per cent of crown revenue.
Audit Office director Allen Parker said: “We never had this issue previously, we were given access, but recently there have been concerns over taxpayer privacy.”
“We cannot place any reliance on taxation figures until such a time where we’re provided access.”
The audit office said their access to tax records ended with the appointment of current treasurer, Xavier Mitchell from the Revenue Management Division at the Ministry of Finance and Economic Management.
Mitchell has previously cited section 7 of the Income Tax 1997 to protect taxpayer confidentiality, however the audit office believes there are ways to accommodate the law while maintaining access.
Parker said: “We know there’s a way around it, we don’t’ need to see the names of businesses and individuals, how much they owe. We just want to know how taxes have been calculated and whether they are reasonable and they can be relied upon.”
Also affecting the auditor’s assessment was the inability of the government to justify its stated values for major assets in all three years.
In fiscal 2016-2017, government reported $144.5 million in property, plant and equipment and infrastructure assets of $123.2 million. The two assets groups are the largest items on the government balance sheet and combined make up for nearly half of all government assets.
In its report, the audit office said the government could not provide evidence to confirm their figures and “has not kept appropriate records and does not have strong enough internal controls to record all of the assets it owns, including those received from donor partners”.
Parker said poor record keeping meant some asset values weren’t being recorded, while assets that appeared in the government’s books were recorded at a value that wasn’t a reflection of their true economic value.
“By default, that task falls on to MFEM,” he said. “They are responsible for the financial statements. They should be liaising to ensure that these assets are captured and recorded by the right agency.”
Parker said any potential misreporting of asset figures could affect the nation’s work with donors and aid development partners.
Yesterday, Opposition leader Tina Browne from the Democratic Party slammed Prime Minister Mark Brown’s government over the findings
“The Director of Audit is concerned, that means we should all be very worried,” Browne said. “The Minister of Finance must know that this is a very disturbing situation and why it’s been allowed to repeat itself every year for so long is completely unacceptable.”
“This does not reflect well at all on MFEM and the Finance secretary needs to take steps that ensure that this worrying pattern the government financial statements has taken over the years stops.”
Financial Secretary Garth Henderson did not respond to questions regarding the audit office’s findings.
While they have yet to be been completed, Parker said the 2018 and 2019 audit reports also reveal the same issues highlighted in the recently released audits.
The delay in releasing audit reports was due to “poor submission times” of financial information from other ministries and crown entities, Parker said, adding submission times have now improved considerably.